Oil giant Shell to stop buying Russian oil and natural gas

This Wednesday, January 20, 2016, photo shows the Shell logo at a petrol station in London. Photo: AP

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This Wednesday, January 20, 2016, photo shows the Shell logo at a petrol station in London. Photo: AP

Energy giant Shell said on Tuesday it would stop buying Russian oil and natural gas and close its gas stations, aviation fuels and other operations in the country in the face of the international pressure for companies to sever ties following the invasion of Ukraine.

The company said in a statement that it would withdraw from all Russian hydrocarbons, including crude oil, petroleum products, natural gas and liquefied natural gas, “in a phased manner”.

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The decision comes as soaring oil prices rocked global markets and days after Ukraine’s foreign minister slammed Shell for continuing to buy Russian oil, blasting the company for continuing to do business with the government of President Vladimir Putin.

“We are fully aware that our decision last week to buy a shipment of Russian crude oil to be refined into products like petrol and diesel – although it was taken with security of supply at the forefront of our thinking. – was the wrong one and we’re sorry,” CEO Ben van Beurden said.

He said profits from the company’s “limited remaining quantities of Russian oil” would go to a fund for relief efforts for Ukrainians.

Ukraine’s Foreign Minister Dmytro Kuleba said he had been told Shell had “quietly” bought the oil on Friday and called on the public to pressure the company and other international companies to put end to these purchases.

“A question to Shell: doesn’t Russian oil smell (like) Ukrainian blood to you? Kuleba said on Twitter. “I call on all conscious people around the world to demand that multinational companies cut all commercial ties with Russia.”

Shell last week said it was “shocked by the loss of life in Ukraine” and would end its joint ventures with Gazprom, the huge Russian government-controlled oil and gas company.

While the United States, Britain and the European Union have imposed tough economic sanctions on Russia, they have refrained from banning oil and gas imports from Russia due to concerns over the impact this would have on the world’s energy supply. Russia is the world’s second largest oil producer, accounting for more than 12% of global production, according to the International Energy Agency.

Ukraine and its supporters have called on countries around the world to stop buying Russian oil to restrict funding for Putin’s military exploits. But it will definitely affect consumers.

A month ago, oil was selling for around $90 a barrel. Today, prices are above $120 a barrel as buyers shun Russian crude, with many refiners fearing sanctions could be imposed in the future. They fear ending up with oil that they could not resell as gasoline if sanctions were imposed in the near future.

“These societal challenges highlight the dilemma between pressuring the Russian government over its atrocities in Ukraine and ensuring a stable and secure energy supply across Europe,” van Beurden said.

He said Shell would work with governments “to help manage potential impacts on the security of energy supplies, particularly in Europe”.

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